Lord Ezra: My Lords, I join the noble Viscount, Lord Goschen, and the noble Lord, Lord Clinton-Davis, in paying tribute to the Donaldson Report. It is a most thorough and exhaustive but readable report on this subject and needs to be taken very seriously indeed. I am glad that the Government's response has been positive and detailed.

The report gave rise to a debate on 25th January which was initiated by my noble friend Lord Perry of Walton. Many of the points in the report were highlighted then. The noble and learned Lord, Lord Donaldson, took part in the debate. As the report indicates, the UK merchant shipping fleet now, regrettably, represents only 1.35 per cent. of the world total. That is an appalling figure when one considers our great maritime past. I was shaken when I read that statistic. However, the smallness of the size of our merchant fleet does not mean that we do not have to take this problem seriously as the UK is one of the major port and coastal states in terms of shipping calling at and passing by our ports. It is for that reason that the report has been prepared and the recommendations made.

As the noble Lord, Lord Clinton-Davis, said, shipping is now becoming more and more competitive. Ship owners are tending to cut costs in order to maintain margins. Therefore, it is more important than ever that a proper regulatory system for inspection should be introduced. The first responsibility is obviously with the flag state. However, we know how deficient that system is and therefore, quite rightly, the report and the Government in their response have emphasised the need for port state control.

There is a graphic phrase in the report which I shall quote and then I shall ask the noble Viscount whether that is the way in which the Government are proceeding in this connection. The report states in paragraph 10:

"At present the inspections constitute the maritime equivalent of roadside checks of heavy goods vehicles ... The essence of our proposals is that these inspections should take on more the character of the Ministry of Transport (MOT) Test enforced for vehicles registered in the United Kingdom".

In the light of that comment, is the noble Viscount satisfied that the steps now being taken will achieve the objective mentioned in the report?

This is not only a national but an international issue. So the question arises, as the noble Lord, Lord Clinton-Davis, has properly mentioned, as to what we are doing with our partners in the European Union and at the International Maritime Organisation. They are no doubt fully familiar with the report. Will they also ensure that it is acted upon by the individual countries of the Union and by the other signatories of the Paris Memorandum of Understanding?

The noble Lord, Lord Clinton-Davis, referred to marine environmental high risk areas. That is one of the recommendations which the Government said they

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would have to consider. In view of the importance of the issue I should like to express the hope that that consideration will be quickly completed.

Finally, I come to funding. Quite obviously, these improved methods of inspection have to be paid for. The proposal is that they should be paid for by the shipping industry. But that raises the question of finding a regional solution which the Government are exploring. Can the noble Viscount explain to us how that is going to be undertaken and what hopes he has of achieving a regional solution?

Viscount Goschen: My Lords, I believe that the report of the noble and learned Lord, Lord Donaldson, has been widely welcomed. I also believe that the Government's response today will be similarly widely welcomed because it basically accepts the broad thrust of the report. It also accepts the vast majority of the noble and learned Lord's recommendations, only four being rejected. I welcome also the attitude of the parties opposite in congratulating the noble and learned Lord, Lord Donaldson, on the work that he has done.

A number of detailed points were raised by the noble Lord, Lord Clinton-Davis. Perhaps I may begin with those points made about the Coastguard Agency and the Marine Safety Agency. These agencies are at the very core of our policies on safety of life at sea around our coasts and also on the prevention of marine pollution.

Efficiency exercises have been carried out, but it is important for me to emphasise to the House today that safety is our paramount concern. It will not be compromised. The Coastguard Agency has been asked to achieve realistic economies without affecting its operational effectiveness or diminishing safety levels. It is important to note that about £3 million has been allocated to the agency to allow implementation of the recommendations following the Donaldson Report. Similarly, the Marine Safety Agency has a reputation for quality. I believe that the two enforce our port state control regime. It is absolutely vital that the agency has the credibility which it has at the moment. Again, reorganisation and efficiency gains have been required from the MSA. Provision has been made for that.

The noble Lord, Lord Clinton-Davis, talked about the provision of tugs. The report suggests that interim arrangements should be put in place, and that we have done. We have sought to provide interim cover which will act as a trial exercise. A great deal has been said both in the press and by the noble Lord today about the nationality of the tugs. It is important to give a little background about that situation. The two tugs chartered by the agency are controlled by the United Kingdom-based company, United Towing, which is a leading member of the International Salvage Union.

Although foreign flagged and crewed, the ships meet the necessary safety and operational standards. They provide an emergency towing response capability at reasonable cost to the taxpayer. We were looking for ships that would be able to do the job properly and these vessels had been operating very successfully in the North Sea. In the incidents to which they have responded they have shown that they represent an extremely effective and efficient response capability.

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This is a trial and we shall be analysing the data which results. We shall see what action needs to be taken on a more permanent basis.

Port state control was the theme of the questions put to me by noble Lords opposite. Taken together, the noble and learned Lord's recommendations on that subject suggested radical alteration to the way in which port state control is currently undertaken. We indicated that we would present the recommendations to our port state control partners, and that we have done. We have put great emphasis behind the noble and learned Lord's recommendations concerning the targeting of ships. It is absolutely vital that the correct ships are targeted so that limited resources can be concentrated on those ships which we believe present the greatest risk. We are pursuing that with our partners in port state control. I believe that the pressure we shall apply will bring them round to our way of thinking on targeting.

It is also worth re-emphasising the policy of dentention which we have pursued and publication of the names of the ships which we have detained. At the onset of that policy there was some concern that that would not be a fair way of going about the business. However, I believe that the policy has been welcomed. Sub-standard ships need to be publicised so that everybody knows what ships have failed to attain the required standard.

The noble Lord, Lord Clinton-Davis, referred to Klondikers. We all accept that this is an intolerable situation particularly for those who live in the Shetland Islands. The situation there is that there are a great many ships, many of which are unsatisfactory, concentrated in a small area. The accidents and losses which have taken place show the risks that are being posed by these vessels. However, at the moment our powers to take action are limited. One of the Government's papers will consider a significant extension of our current powers as we seek to close the gaps which the Klondikers have demonstrated exist. Our programme of inspection of Klondikers will continue and we shall detain sub-standard ships if they are in port. The Scottish Office has produced a consultation document aimed at limiting the number of Klondiker licences issued on fisheries grounds. The Department of Transport's consultation paper will examine alternative means of ensuring that Klondikers and other ships operating in our waters conform to agreed safety standards.

In looking at the issue of Klondikers it is important to realise that they are very important to the economy of the region. The fishermen welcome them as a market for their catches. But we have to ensure that the right number of Klondikers are there. Some of them have seen no fish over their sides at all during the season. There are crews which have not been paid or there are not insufficient bunkers on board. There is a wide range of problems. It is not the case that we can just snap our fingers and solve the problem. We take it very seriously and that is why we are consulting in two different ways.

As regards funding, we are committed to the principle that the user should pay. It is because of the possible competitive disadvantage to our ports and shipping industry that we are initially seeking a European approach to user charging. Our proposed consultation

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paper on funding will advance possible regional approaches. The paper will also consider the scope for unilateral action and the possibility of early legislation in order to seek enabling powers to allow charging.

I hope that that response covers the bulk of the questions which were put to me by noble Lords opposite. If I have missed any I shall certainly write to noble Lords.